Facebook to go public in massive IPO

Facebook, the world's biggest social networking site, hopes to raise as much as $16bn in its highly anticipated initial public offering [IPO] on Friday.

The social networking site has said that 421 million shares of common stock will be offered at $38 in the IPO. Facebook itself is selling 180 million and holders of previous shares are selling 241 million.

From a dorm room in Harvard to swank headquarters in Silicon Valley, Facebook - now the world's second-most-visited website - has grown exponentially since its founding in 2004 by Mark Zuckerberg.

A number of internet companies have launched IPOs over the past year, including Yelp, Groupon, Zynga, Pandora, Renren, and LinkedIn. But the size of the Facebook offering - which will trade on the NASDAQ stock exchange - promises to dwarf those of its peers.

On Tuesday, Facebook said it estimated its shares would initially sell for between $34 and $38, implying a valuation of about $100bn for the company - roughly the same size as blue-chip behemoths such as PepsiCo, Visa, and McDonald's, and far bigger than computer companies Dell and Hewlett-Packard.

If shares sell at the higher estimate of $38, the IPO could be the third-biggest in US history.
Apple co-founder Steve Wozniak recently added to the hype, saying that he planned to buy Facebook stock, no matter how high the price.

Overvalued?
Some analysts raise concerns, however, that Facebook may be overvalued.
"This is much more a spectacle, a media event and a cultural moment than it is an IPO," Max Wolff, an analyst at GreenCrest Capital, told Reuters news agency. "This is not a game of models and fundamentals at this point."

Most of Facebook's revenue currently comes from advertising, though investors hope that the company may find other ways of making money from its 900 million users.

In 2011, Facebook made $4.34 per user in advertising - which is higher than in previous years, but nowhere near the $30 per user per year that Google makes.

On Tuesday, General Motors announced that it planned to stop advertising on the website, claiming the $10m it had spent on ads had been ineffective.

Privacy concerns
The IPO is also highlighting Facebook's privacy policies. The website has drawn criticism for its sometimes opaque and frequently shifting policies regarding users' data. 

In 2010, the Wall Street Journal found that some applications on the site were transmitting user IDs to advertising companies - enabling them to look up users' real names, regardless of their privacy settings. And since last year, Facebook has been using facial recognition technology to allow users to automatically tag others in uploaded pictures.

"The story from day one for Facebook has been trying to figure out how to monetise the value of the users while showing some respect for privacy," Marc Rotenberg, executive director of the Electronic Privacy Information Centre, told Al Jazeera.
"Given the choice between extracting more commercial value or respecting the privacy settings of users, Facebook takes option one."

A poll recently conducted by Associated Press and CNBC found that just 13 per cent of US adults trust Facebook "completely" or "a lot" to keep their information private.

"One of the things we'll end up seeing this week," said Rotenberg, "is the extent to which investors believe that Facebook will be able to successfully manage privacy issues going forward." watch video